Washington - The US government was preparing to take over and bailout the twin mortgage finance giants Fannie Mae and Freddie Mac, according to a New York Times report late Friday that cited officials and company executives who have been briefed on the plan.

The two companies would be placed in a conservatorship, the Times reported. Such a move would be the newest shock to US finance markets as the country struggles with soaring mortgage foreclosures that have undermined the US economy.

The chief executives of the two companies were summoned to the offices of the companies' new regulator, and told that they and their boards would be replaced, the Times reported.

Shareholders in the two companies would lose most of their investment, with taxpayers carrying any remaining guaranteed worth.

In August, Fannie Mae reported a second quarter loss of 2.3 billion dollars, marking the fourth straight quarter of losses for the US bank. The company recorded a 1.86 dollar gain in the same period a year ago. (dpa)